Union Finance Minister Arun Jaitley on Sunday cautioned against unauthorised disclosure of information on foreign bank account holders in violation of tax treaties as it would jeopardise investigations, giving an escape route to the persons in question.
“They can attract sanctions in the form of withholding taxes. It is obvious that in a choice between unauthorised disclosure and disclosure as per treaties, the latter is both a fair and beneficial proposition. It will help in collection of evidence and exposure of a wrongdoing in accordance with law and fair procedure. A disclosure without evidence would ensure that evidence is never available,” he said in a Facebook post.
He said confidentiality clauses made it incumbent that disclosure was made only after prosecution was filed before a court.
Stating that premature disclosure would also alert the account holder, Mr. Jaitley said: “The reciprocating State would treat this as a violation of a tax treaty and refuse to provide any evidence in support of the unauthorised account. The holder of the unauthorised account in the absence of any proof and confirmation from the reciprocating State would get the benefit in any investigation or prosecution and then claim that ‘I stand vindicated’.”
Asking whether India wanted to be a part of the global coalition for automatic sharing of information, the Finance Minister said: “In the recent meeting of about 50 countries in Berlin which proposed automatic sharing of information, India could not participate since a prevalent view is that confidentiality clauses are unconstitutional in Indian law. This view requires reconsideration.”
Mr. Jaitley also advocated compliance with the U.S. Foreign Account Tax Compliance Act, warning that the consequences of not signing an agreement it would be disastrous.”
